When you started your first job, you were asked to open a bank account with a certain bank. You thought, “This must be how it’s done” and went ahead and signed a few forms. It was the same for your second job, and your third, and the Nth.
But what we really need is just one account.
Enter Account Aggregator
Account Aggregator or AA has been something of a buzzword in banking and tech circles off late. It is poised to revolutionise the financial services sector the same way UPI did for online payments.
Think back to those pre-UPI days when leaving the house without your wallet was as unimaginable as leaving without your mask. Now, even if you forget it at home, you can pay for almost everything from rickshaw fare to restaurant bills with your phone. UPI-based apps have made cash and debit cards almost obsolete.
People well-versed with the AA framework, us included, see equal if not more possibilities in its ability to disrupt the status quo. If you have multiple bank accounts, investments and a few loans, this is one area where AA can help.
It’s all connected
Everything from the identity data you share to open a bank account to records of all your expenses, incomes and investments are available with your bank. This is the tap that feeds data into the pipeline.
With all of your bank accounts connected to the framework, a smart digital financial assistant could help keep track of all your spending, income, savings, debt and investments to give you a holistic view of your finances.
Neobanks like Fi offers a similar experience with their artificial intelligence-powered digital financial assistants. They usually can make tracking your expenses as simple as asking “how much did I spend on eating out last month?”.
It’s one of the numerous ways AA can make life easier for you. Its use cases range from sharply reducing the time and cost of taking a loan to better investment advice based on your overall financial position.
All things privacy
While you may be concerned about data privacy and security, the good news is that the AA framework has features built in to ensure high standards of security and privacy.
The entire system has been designed to keep user consent in mind and to give people more control over their data. This means you and only you decide who can access and store your financial information.
The Reserve Bank of India has also laid down the rules for AA to ensure security. One important rule is that your financial data has to be end-to-end encrypted and it cannot be stored by any middle-players in the framework.
Going forward, the AA framework is likely to be put to use across sectors such as healthcare so you don’t need to carry a file full of your medical history when going to a new doctor.
By, Sumit Gwalani, Co-founder of Fi